Definition:
A capital contribution is a contribution of capital, in the form of money or property, to a business by an owner, partner, or shareholder. The contribution increases the owner's equity interest in the business.
In the case of a shareholder, the contribution does not increase the amount of outstanding shares, but it adds to the owner's basis in the shareholder's basis. Capital contributions are not counted as business income, unless the contributions are in the form of a loan that is expected to be repaid.
